Legislative audit dings livestock agency over settlement

HELENA — A Montana state agency violated the law when it used livestock fees to pay part of a $204,000 settlement after its executive director resigned last year amid scrutiny over how money was being spent, the legislative auditor said.

In a report presented Thursday to the Legislative Audit Committee, the auditor asserted that the Department of Livestock inappropriately paid for the settlement using money intended for enforcing livestock laws.

"A termination settlement payment is not an expense incurred as a result of enforcement of livestock laws," the audit says.

The settlement with Christian Mackay included two years of salary at $84,260 a year, payment for unused personal days, and a $21,000 fee for his services during the transition to new leadership.

The first installment of the settlement totaled $120,034 and was paid just a few days after the department announced Mackay's resignation on Sept. 21.

The payments struck a sour note among some workers because of layoffs and workforce adjustments nine months earlier due to a nearly $300,000 budget deficit.

The department acknowledged that the settlement was not specifically an enforcement expense but was part of the department's cost to effectively run the agency.

The audit unleashed a barrage of criticism from some members of the audit committee, who suggested the agency's board of directors failed to comprehend the depth of concern among the legislators.

Rep. Mitch Tropila, a Democrat from Great Falls, said he was appalled by the agency's seemingly combative response to the auditor's findings. He cited the agency's long history of budgetary troubles, including previous audits that suggested the agency was not following proper budgetary protocols.

John Scully, vice chair of the agency's board, later said he understood the furor.

"I don't blame them for being upset, but we're going to get things solved," Scully said.

In its written response to the audit, the agency said it was looking for the most expedient way to move forward when it reached a settlement with Mackay.

"Dysfunction created with the department by issues stemming from the executive office that ultimately resulted in layoffs, furloughs and increased turnover threatened the future ability of the department to carry out is duties effectively and efficiently," the department said.

The department's new executive director, Mike Honeycutt, was hired in January and has attempted to boost agency morale by exploring pay increases. He also sought to take better control of the budgeting process.

"We're looking into how we can get ourselves in a position where we can build some safety nets within our department," Honeycutt said, "so that if we have some major glitch in revenue, we're not forced to do furloughs, layoffs and very drastic actions."

The department said it had no other way to pay for the termination agreement with Mackay, but the auditor said the department could have tapped its general fund, applied for contingency funding from the Governor's Office or obtained a loan from other state agencies.

The department has used fees collected from ranchers for their herds to pay the salary of its executive director and considered it appropriate to use the same fees to compensate Mackay when he left.

Nevertheless, the department said it would consider other options to pay for the remaining $84,000 still owed on the settlement.